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Sears Essentials (Kmart) logo (Photo credit: Wikipedia)

Sears Holdings last quarter performed even worse than feared, dimming hopes for the company to complete what would now be a massive—and surprising—turnaround.

Sears posted a $211 million loss , $1.99 a share, after earning $93 million, 54 cents a share, a year earlier. Excluding charges tied to the company's restructuring efforts, it lost $498 million, $4.70 a share. Analysts had predicted Sears would lose only $91 million, 86 cents a share.

Sales at established locations fell by 3.1%. The greatest declines came at Kmart stores, which dropped 4.8%. At the company's namesake stores, sales decreased 1.6%. In all, revenue declined to $8.86 billion, from $9.57 billion a year earlier, primarily from the closing of many stores.

"This industry, the retail industry, continues to change dramatically and rapidly. It will never go back to what it was, and we've seen the consequences for those that have not changed fast enough," Sears' CEO Louis D'Ambrosio told analysts last night.

As stores gear up for the crucial holiday shopping season, Sears seems stagnant. The chain, controlled by hedge fund manager Eddie Lampert, competes most with Wal-Mart and Target, as well as Costco and discount chains like Dollar General. It is struggling to attract customers, and has lead many investors to complete sum-of-the-parts valuations: Many believe Sears will either liquidate or that Lampert will buy the small public float that remains.

Shares of Sears fell by 14.3% in late morning trading today.

Sears has moved to shutter stores, sell real estate and tighten inventory in an turnaround effort this year. It spun off its Orchard Supply Hardware Stores last December, then also spun off its Hometown and Outlet businesses and a large portion of its stake in Canadian unit, Sears Canada.

Dollars have also gone toward improving the shopping experience. Sears CEO D'Amrosio says half of all Web sales now include an interaction with store personnel too; there are options to order online then pick up in stores. Displays have been jazzed up. Staffers have iPads to research products. All sensible moves that could impress customers. If there were any in the stores.